Double bottom suggests EURUSD reversal toward 1.175

The EURUSD pair fell sharply last week, finding support at 1.155. Bears failed to break this floor, and a rebound is now underway. A double-bottom pattern has formed on the one-hour (H1) and four-hour (H4) charts, with the price testing its neckline. If it consolidates above this threshold, it could pave the way to 1.175.

Technically, a EURUSD recovery appears plausible. The RSI has stabilized near its midline, and the MACD is poised to turn positive for the first time since early October. The key test will be a clean break above the 1.163 neckline and the 50-day moving average. A successful breach by the bulls would open up upside potential toward the 1.175 resistance, though a drop below 1.155 would invalidate this scenario.

According to Reuters analysts, the dollar's recent strength did not stem from a brighter US outlook, but rather from investors fleeing the yen and euro. This rally was also fueled by a market positioned for a reversal, with mid-September short bets on the greenback hitting a two-year high. While that rebound has now played out, there are no more catalysts for further dollar gains. Instead, the potential for a new downtrend is growing. 

Jerome Powell's recent remarks lend credence to this scenario, as he emphasized resurgent concerns over a deteriorating labor market—worries previously obscured by the government shutdown. The Federal Reserve (Fed) Chairman also corroborated that September inflation statistics will be disclosed on October 24, irrespective of the shutdown, ensuring that the regulator has sufficient data to cut interest rates at its October 29 meeting.

The following trading strategy may come into play:

Buy EURUSD when it is higher than 1.163. Take profit: 1.175. Stop loss: 1.155.